TMI Blog1995 (3) TMI 34X X X X Extracts X X X X X X X X Extracts X X X X ..... tober 24, 1973, respectively, without taking delivery of the goods and the difference of an amount of Rs. 10,750 was paid to each of the parties. The actual payments to these parties were made in the next year and credit was made in the account of the respective parties. During the course of assessment proceedings, the assessee was asked to produce the books of account and details of these credits as was evident from the balance-sheet. The assessee claimed that the amount is a business loss. The contention of the assessee was not accepted and Rs. 21,500 was treated as speculation loss which was disallowed and penalty proceedings were initiated. In the penalty proceedings, it was found that the assessee had not led any evidence to prove that the transaction was not a speculation transaction and the addition so made in the assessment order was upheld by the Income-tax Appellate Tribunal as well. The Income-tax Officer was of the view that the assessee had adopted a tactic of showing the same in the balance-sheet in order to reduce the taxable income and to avoid the payment of legitimate amount of tax. The burden which was on the assessee to prove that there was no intention to conce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and reliance has been placed on the decision of the Calcutta High Court in the case of CIT v. Anglo-Indian Jute Mills Co. Ltd. [1980] 124 ITR 384. In these circumstances, it was held that no facts have been suppressed by the assessee and/or made to appear in a way that the apparent state of affairs was not real. It was for the Income-tax Officer to examine the facts and come to the proper conclusion as he has evidently done. The charge of concealment of income, therefore, was held not sustainable, and the penalty was cancelled. We have considered over the matter. The Explanation to section 271(1)(c) is applicable inasmuch as the assessment was completed on the income of, Rs. 99,994 and this included the addition of Rs. 21,500. The Explanation contemplates that the amount of the assessed income is correct and failure by the assessee to return the said income was due to concealment of particulars of his income or on account of inaccurate particulars of such income, the burden which has been placed by the Explanation is rebuttable and the initial burden has to be discharged by the assessee by placing material or evidence to prove the preponderance of the evidence. If the initial bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Calcutta High Court in the case of CIT v. Anglo-Indian Jute Mills Co. Ltd. [1980] 124 ITR 384. Taking into consideration these facts the Tribunal came to the conclusion that no facts have been suppressed by the assessee. It was for the Income-tax Officer to examine the facts and come to the proper conclusion as he has evidently done, but a charge of concealment of income cannot obviously be sustained in the circumstances of the case. From the observations of the Tribunal two things are apparent, (i) that the state of law as it was existing at that time led the assessee to believe that the loss arose not from the speculative transactions ; and (ii) it was for the Income-tax Officer to examine the books of account and since the entries were in the books of account, the assessee cannot be said to have made any entry to disguise the real nature of the transaction. Firstly, the basic requirement of the Explanation to section 271(1)(c) was to discharge the initial burden by the assessee to prove that it was not on account of fraud or wilful negligence on the part of the assessee. No evidence was produced by the assessee, and only the explanation was given. The first part of the exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f examining the point whether the initial burden which was required to be discharged under the Explanation to section 271(1)(c) has been discharged or not and not whether the offence under section 271(1)(c) has been committed or not. The question of existence of the entries in the books of account could have been a valid consideration only after the initial burden which was on the assessee was discharged. At the most the other part which was taken into consideration by the Tribunal could be considered on the basis of which it could or could not be said whether the initial burden was discharged by the assessee and that was stated by the Tribunal that in the state of law then existing the assessee would consider that the loss arose not from speculative transactions and in support of that the decision in the case of Anglo-Indian Jute Mills [1980] 124 ITR 384, of the Calcutta High Court was taken into consideration. So far as the assessee is concerned, the other point was finally decided by the Tribunal against the assessee that the loss was from speculative transaction. There can be a possibility where there can be two views on a particular interpretation taken by the assessee. In thi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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